Federal Circuit Dismisses Patent Eligibility Appeal as Moot in In re Hybir, Applying “Side Bet” Doctrine to $100 Settlement Option

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a decision on April 22, 2026, in In re Hybir, Inc., dismissing a patent eligibility appeal as moot. The opinion was authored by Judge Stoll and joined by Judge Chen and Judge Hughes. The court applied the “side bet” doctrine, holding that the terms of a settlement agreement between the parties extinguished any live case or controversy over the appeal.

The underlying dispute centered on U.S. Patent No. 8,051,043. The U.S. District Court for the District of Massachusetts had granted Veeam Software Corp.’s motion for judgment on the pleadings, finding that claims 3, 4, 7, 16, 17, and 20 of the ‘043 patent were ineligible under 35 U.S.C. § 101. The district court characterized the claims as directed to the abstract idea of providing information based on a location on a map.

Following the district court’s ruling, Hybir and Veeam Software Corp. entered into a Settlement and Limited Patent License Agreement. Under the agreement, Hybir licensed several other patents to Veeam Software Corp. while expressly reserving the right to appeal the final judgment on the ‘043 patent. Veeam Software Corp. agreed not to participate in the appeal in any form. The agreement also provided that, after the appeal concluded, Veeam Software Corp. would have the option to add the ‘043 patent to its licensed patents list for a payment of $100.

The CAFC held that the $100 option was insufficient to maintain a live case or controversy. The court relied on its 2013 decision in Allflex USA, Inc. v. Avid Identification Systems, Inc., in which a $50,000 payment reduction tied to the outcome of an appeal was characterized as a “side bet” and held not to create a live controversy. Applying that precedent, the CAFC stated: “If we considered an untethered $50,000 amount in Allflex to be a ‘token or arbitrary sum’ that did not create a live case or controversy, then surely the untethered $100 amount here is an even smaller token that likewise cannot create such a controversy.”

At oral argument, Hybir attempted to distinguish Allflex on the ground that the $100 payment was optional rather than mandatory. Hybir argued that if the CAFC reversed and found the claims eligible, Veeam Software Corp. might decline to exercise the option and instead pursue invalidity through other means. The CAFC rejected this argument as “unsubstantiated speculation,” finding that Hybir had not demonstrated a real and imminent injury sufficient to establish a live controversy.

Because Hybir failed to show a live case or controversy, the CAFC dismissed the appeal as moot, left the district court’s judgment undisturbed, and ordered Hybir to bear its own costs.

The decision reinforces a practical risk for patent owners who settle while reserving appeal rights: if the financial terms tied to the appeal outcome are not commensurate with the patent’s economic value, courts may treat the arrangement as a “side bet” and dismiss the appeal as moot. Patent practitioners should structure settlement agreements carefully, ensuring that any contingent payment terms bear a rational relationship to the value of the claims at issue, rather than serving merely as a nominal placeholder.